Duluth's tourism industry nearly back to pre-pandemic level
Tourist spending has returned, but many local businesses are still feeling squeezed.
DULUTH — Local tourism tax collections through November 2021 returned to nearly pre-pandemic levels.
For the first 11 months of the year, the city took in about $11.4 million in taxes on lodging and sales of food and drink. That's just 0.3% less than it received during the same period in 2019, before COVID-19 changed everything.
What a difference a year has made. In comparison, Duluth’s tourism tax collections for the first 11 months of 2020 were down 31% from the same span during the previous year.
RELATED STORY: Duluth tourist spending tumbles by nearly one-third in 2020
In budgeting for tourism tax collections this year, the city had forecast a modest recovery well below pre-pandemic levels, but Jen Carlson, Duluth’s financial director, said she has been pleasantly surprised by the numbers now rolling in.
“We’re an outdoor city, and I think people were ready to come and visit and stay, with all our outdoor options,” she said.
Local hotel and motel revenues through November 2021 actually were up more than 5% compared to 2019.
In contrast, sales of food and drink through November remained down more than 5% versus those of 2019, and many restaurants have seen their bottom lines painfully squeezed.
“Food and beverage sales are down across the nation. That’s likely due to workforce and food supply challenges,” Carlson said.
Nancy Norr, the newly appointed interim executive director of Visit Duluth, described the latest tourism tax numbers as “extremely heartening.” She noted that collections for the month of November actually surpassed those of November 2019.
“There were some exciting developments in November that may have helped drive these numbers. We had the kickoff of the youth hockey tournament season,” Norr said, also pointing to the November opening of the popular Bentleyville “Tour of Lights” display on the heels of the Christmas City of the North Parade.
“We’re not yet seeing high demand for conventions and meetings. It should be no surprise that there’s still generally a more conservative approach to those kinds of gatherings. But we’re definitely seeing visitors and guests come to this community for all the reasons that we love living here, for their own recreation and entertainment,” Norr said.
However, people are starting to book events, according to Dan Hartman, executive director of the Duluth Entertainment Convention Center.
“As of now, our conference schedule in the spring is still pretty big. We’ve had very few cancellations, to date,” Harman said.
Although the fast-spreading omicron variant of the coronavirus continues to stir concerns, he said: “If the new variant acts the same way that it did in South Africa, where it comes and goes pretty quickly, I would foresee the convention business picking up pretty quickly within a month after that.”
While certainly encouraging, the ongoing recovery in Duluth remains uneven and incomplete for many in Duluth’s tourism industry.
“Every blessing has its burdens,” said Brian Daugherty, president of Duluth-based Grandma’s Restaurant Co. “We feel so fortunate that demand is up. That really shows people are interested in coming and being engaged with our city, just like they’ve always been. It’s wonderfully refreshing.”
“But the challenges are up threefold,” he said.
“First, there’s the managing and dealing with COVID. It’s still here. It still spikes. We still don’t know what we’ll have for staff on a daily basis,” Daugherty said, noting that staff exposure to the virus and the need to quarantine often force last-minute schedule changes.
Restaurants also have had to frequently adjust operating protocols to ensure the welfare and comfort of customers.
Dealing with supply chain issues remains yet another challenge that has caused the cost of certain products to spike.
“Look at protein prices. Holy cow!” Daugherty said, pun intended.
“And third, there’s the great resignation,” he said. Daugherty estimates that about a third of his work force has left the hospitality industry due to safety concerns and a re-evaluation of their career goals.
Hartman sounded a similar refrain.
“Staffing has been tough for the DECC, and it sounds like it’s been tough for just about everyone I talk to," he said.
Hartman said the DECC currently employs about 250 people at a time when it could really use more like 320.
RELATED STORY: Lake Superior Zoo bounces back from pandemic
To retain and recruit new staff, employers have had to significantly boost pay. Daugherty estimated wages for people working in the hospitality industry have easily risen by 25% since the pandemic began.
Even so, he said: “We are limited in our hours because we’re limited in our staff. So, we are not open nearly as much as we used to be.”
In light of still-lagging sales of food and beverages in Duluth, Carlson said she doesn’t expect annual tourism tax collections in 2021 will prove quite sufficient to match those of 2019.
But, Norr said: “I would go out on a limb and put my money on 2021 catching up with 2019.”
For his part, Daugherty declined to prognosticate.
“Last year was very difficult on me emotionally, because I would get depressed by not meeting people’s expectations. You know, I’ve been doing this forever. Ketchup is in my blood. I’m a people-pleaser. That’s what I do. But there was so much disappointment on the part of customers that it was a tough year on me,” he said.
“So, I adjusted my attitude, and I don’t predict anymore, because every day deals us something different now. I just try to accept the cards that are laid in front of me every day.”